Oil Firms Plan Rapid-Response Force

By

Angel Gonzalez

Updated July 22, 2010 12:01 a.m. ET

Four of the world's largest oil companies are creating a strike force to stanch oil spills in the deep waters of the Gulf of Mexico in a billion-dollar bid to regain the confidence of the White House after BP PLC's disaster.

ENLARGE

In an April photo, an oil rig is seen in the Gulf of Mexico, off the Southeastern tip of Louisiana.
Associated Press

Exxon Mobil Corp.XOM-4.58%, Chevron Corp.CVX-4.89%, Royal Dutch Shell PLC and ConocoPhillips said Wednesday that they are forming a joint venture to design, build and operate a rapid-response system to capture and contain up to 100,000 barrels of oil a day flowing 10,000 feet below the surface of the sea.

BP's Deepwater Horizon well had been leaking up to 60,000 barrels per day 5,000 feet below the surface.

The new system, consisting of several oil-collection ships and an array of subsurface containment equipment, resembles the one developed by BP during three months of trial and error after its leased rig exploded April 20, unleashing the worst offshore oil spill in U.S. history.

But the companies say it will be ready to go at all times and can be used on the wide variety of equipment found in the deepwater Gulf.

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BP, which is still engaged in its prolonged effort to permanently stop the resulting oil spill and clean it up, wasn't asked to join the strike-force consortium. "We don't want to distract them at all," said Rex Tillerson, CEO of Exxon, which is leading the system's engineering and construction.

But BP, along with other companies operating in the Gulf, may be able to use the strike force.

The companies will evenly split an initial investment of $1 billion in the nonprofit venture, which they are calling the Marine Well Containment Co. But the tab to build the system and have crews on alert for years could run in the billions of dollars.

The containment system will be designed to deal with well blowouts and is expected to be ready within 18 months, Exxon said. The response team should be able to start mobilizing within 24 hours of an oil spill, and be fully in place within weeks, said Sara Ortwein, vice president of engineering for Exxon Mobil Development Co.

The oil companies hope the plan will help deflect the intense official and public criticism of the oil industry. Despite major technological breakthroughs that led to the exploitation of oil and gas trapped far below sea level, the industry was caught without an effective response to the Deepwater Horizon oil spill.

Last June, the chief executives of Exxon, Shell, Chevron, ConocoPhillips and BP were grilled by lawmakers who accused them of using "cookie cutter" plans for responding to large-scale oil spills. Mr. Tillerson acknowledged that the industry had been caught unprepared for a disaster.

BP spokesman Scott Dean said in a statement that lessons from the Deepwater Horizon spill "will change how the industry operates offshore and responds to oil spills." Mr. Dean added that the oil companies' plan "seems to incorporate many of the tools and approaches that BP has brought to bear in this incident," and that BP will share what it has learned from the spill with the rest of the industry.

On July 12, U.S. authorities reimposed a deepwater drilling moratorium, which has been vehemently opposed by the oil industry since it was first imposed in May but which the government says is necessary to ensure safe drilling practices.

The new system "clearly would address" concerns about the industry's capability to deal with massive spills, Mr. Tillerson said in an interview, even though Exxon and the oil industry say that such events are preventable.

"We're going to build this and my view is, we're never going to use it," Mr. Tillerson said. But "it's fair for the American people and it's fair for the regulator to expect us to have some mechanical capability to deal with an event in the future that is more readily available for deployment."

The oil giants' joint-venture is modeled after the Marine Spill Response Corp., a national oil spill response company funded by the oil and shipping industry in 1990, after the Exxon Valdez oil spill prompted a major overhaul in petroleum pollution legislation. That entity still exists and can work in conjunction with the oil firms' new system.

Michael Bromwich, director of the Bureau of Ocean Energy Management, Regulation, and Enforcement, said in a statement that the government is encouraged by the fact that some oil companies recognize their limitations in responding to major oil spills and "are taking steps to correct it."

Rep. Edward Markey (D., Mass), said companies must invest more in technologies that will prevent blowouts in the first place. "While this could be a rapidly deployed system, the oil companies must do better than BP's current apparatus with a fresh coat of paint," he said in a statement.

Derb Carter, a senior attorney with the Southern Environmental Law Center, a nonprofit that supports the deepwater drilling ban, said that the plan seems vague and slow. "The oil industry's assurances of plans to contain deepwater spills do not carry much weight now," Mr. Carter said.

It took BP three months of progressively ambitious plans and numerous failed attempts to contain the flow from the current spill, a feat finally achieved last Thursday. During that time, millions of barrels of oil gushed into the Gulf of Mexico, creating one of the worst environmental and economic disasters ever to afflict the region.

Mr. Tillerson said that while the system is being designed specifically for the Gulf of Mexico, he expected regulators in other parts of the world to "take an interest in what we're doing here."

About 40 engineers with the four companies involved have been working in the project "around the clock" for more than a month, Ms. Ortwein said.

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The system proposed by the new companies is somewhat similar to BP's painstakingly assembled fleet, but it would be adaptable to different conditions, Ms. Ortwein said.

First, responders would install a sealing cap that would have the ability to connect to the diverse systems of valves and casings in use in the deepwater Gulf. That cap would keep oil from escaping into the ocean, redirecting it towards flexible pipes or to a fixed riser located at an unspecified distance from the broken well.

The pipes would connect to ships modified to process large quantities of crude. One of the advantages of the system is that only two ships would be required to capture up to 100,000 barrels of oil a day, which would be off-loaded onto shuttle tankers.

In the case of a hurricane, the fleet would rapidly disconnect and let the oil flow, but dispersant could be applied to diminish the environmental impact, Ms. Ortwein said.

Ultimately the four companies would like the rest of the industry to join in the effort, said Marvin Odum, director of Shell's Upstream Americas unit. But "for the sake of speed and answering questions from lawmakers now," he added, "we felt it was important to take these steps."

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